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Sales Force Effectiveness in Pharmaceuticals - Targeted Sales Models such as Enhanced Key Account Management (KAM) and Closed-Loop Marketing (CLM) Strategies Drives Sales Force Efficiency

Executive Summary

Sales Force Effectiveness in Pharmaceuticals.

Knowledge is key for pharmaceutical sales forces, who should be offered training and incentives to increase sales and improve productivity, says a new report by healthcare experts GBI Research.

The new report* states that the importance of internal training cannot be understated, with the significant investments, advanced training techniques, and use of external training consultants by major pharma companies playing testament to this.

In recent years, the sales industry within the US and Europe has recorded sales job reductions as a result of the global economic recession, and this has led to a greater demand for effective selling methods. Companies forced to downsize their sales forces still aim to secure high sales figures, and are therefore pressurized to develop their sales people to continue to deliver profitable sales growth.

The short term motive behind sales force training is to increase sales and improve productivity. However, the long term motive is to motivate the sales force, build better customer relations and effectively improve employee retention rates. Incentive management is a significant tool that encourages sales activities, but also helps to improve longer term sales force effectiveness.

Incentive management has not always been implemented as a high priority, and was not always properly integrated into the sales management process. However, a large number of companies are now implementing incentive management solutions that provide the flexibility to quickly adjust compensation plans in order to improve sales force performance. This solution has the ability to adjust to specific company needs, and allows for the integration of existing processes and systems.

Performance dashboards are an important and powerful agent of organizational change, translating organizations' strategies into objectives that are customized to every individual in the organization. Dashboards contain various performance indicators which are used to monitor business processes through analysing the performance of sales representatives and customer response. This allows sales representatives to compare their benchmarked performance against peer averages, and can help shape training and incentive schemes to improve certain aspects of sales performance.

Sales Force Effectiveness in Pharmaceuticals - Targeted Sales Models such as Enhanced Key Account Management (KAM) and Closed-Loop Marketing (CLM) Strategies Drives Sales Force Efficiency

This report provides an in-depth analysis of trends and practices adopted to improve sales force effectiveness in the pharmaceutical industry. It provides a comprehensive insight into the strategies adopted by pharmaceutical companies to improve their sales force effectiveness, and gives case studies and sales force strategies of pharmaceutical companies and IT solution providers. The report also analyzes the opportunities and challenges that could play a role in shaping the future of sales force effectiveness. The report finishes with a detailed analysis of 12 key pharmaceutical companies, with respect to their sales efficiency.

This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research's team of industry experts.

Abstract

Sales Force Effectiveness in Pharmaceuticals - Targeted Sales Models such as Enhanced Key Account Management (KAM) and Closed-Loop Marketing (CLM) Strategies Drives Sales Force Efficiency

Summary

Leading business intelligence provider GBI Research has released its latest research report, entitled "Sales Force Effectiveness in Pharmaceuticals - Targeted Sales Models such as Enhanced Key Account Management (KAM) and Closed-Loop Marketing (CLM) Strategies Drives Sales Force Efficiency". The report provides key data, information and analysis of trends and practices adopted to improve sales force effectiveness in the pharmaceutical industry. The report provides a comprehensive insight into the strategies adopted by pharmaceutical companies to improve their sales force effectiveness. It provides case studies and sales force strategies of pharmaceutical companies and IT solution providers. The report also analyzes the opportunities and challenges that could play a role in shaping the future of sales force effectiveness. The report finishes with a detailed analysis of 12 key pharmaceutical companies, with respect to their sales efficiency.

This report is built using data and information sourced from proprietary databases, primary and secondary research, and in house analysis by GBI Research's team of industry experts.

At present, the pharmaceutical industry is changing due to expensive promotion and research and development (R&D) campaigns, which are crucial to examine opportunities to simplify and streamline operations in order to align businesses towards the needs of customers. In this situation, sales force effectiveness drives the success of pharmaceutical companies. Sales force effectiveness begins with developing an effective sales strategy, sizing and structuring the sales force, designing incentive compensation plans, setting goals, managing sales performance, recruiting sales people, motivating the sales force, building a potent sales force culture, and coordinating sales and marketing.

Pharmaceutical companies should have the best sales force to generate the most sales, and should also know how to integrate strategic business objectives with selection program strategies. Due to the changing pharmaceutical market environment, sales force roles are also changing. Sales representatives in leading companies now have the responsibility of delivering marketing messages and offering information and educational opportunities to physicians to build and change behaviors and relationships. Physician demand for more detailed, comparative and customized information from pharmaceutical sales representatives is also increasing. As a result, new sales representatives should have the right set of skills to play these varying roles.

In recent years, there has been a change in direction in the pharmaceutical industry about methods for effectiveness selling. The industry has recorded a number of sales job cuts, and as a result, sales forces in the US and Europe has reduced drastically. This reduction has forced pharmaceutical companies to change the size, structure and sales strategies of their sales forces. In addition, pharmaceutical companies are now under pressure to generate more profits with smaller sales forces. To achieve this, pharmaceutical companies are adopting strategies to remain competitive in the market.

Scope

  • The need for sales force effectiveness for pharmaceutical companies and the factors that affect it.
  • A study of major strategic sales models with case studies that enhance sales force effectiveness.
  • Sales force sizing, recruitment strategies, and key sale force training and compensation models.
  • An analysis of the competitive landscape, including profiles of major companies such as Pfizer, GlaxoSmithKline, Teva Pharmaceuticals, Novartis, Merck & Co., BMS, Johnson & Johnson, Eli Lilly, AstraZeneca, Abbott and Sanofi.

Reasons to buy

  • Develop key strategies to reduce expenditure on sales forces and increase sales force effectiveness
  • Optimize your organization's resource allocation by identifying key models to size, recruit and train sales forces
  • Develop and understand how companies use tools and models to improve sales force effectiveness
  • Make informed decisions with respect to sales force training and compensation
  • Make more informed business decisions from the insightful and in-depth analysis of sales force effectiveness sales models and the factors that shape them.

TOC

1 Table of Contents

1 Table of Contents 5

  • 1.1 List of Tables 7
  • 1.2 List of Figures 7

2 Introduction 9

3 Sales Force Effectiveness in Pharmaceuticals - An Overview 10

  • 3.1 Sales Force Effectiveness Required 10
    • 3.1.1 Declining Return on Investment (ROI) for R&D Expenditure 10
    • 3.1.2 Pharmaceutical Company Staff Reductions 12
    • 3.1.3 Changing Product Portfolios 13
    • 3.1.4 Difficulty Attaining Regulatory Approval 13
    • 3.1.5 Specialty Care Focus 13
    • 3.1.6 Industry Consolidation and Changing Competition 13
    • 3.1.7 IT Increasingly Applied to Sales Models 13

4 Sales Force Effectiveness in Pharmaceuticals - Role of New Sales Models and Strategies 14

  • 4.1 Implementation of Strategies in Pharmaceutical Companies 14
    • 4.1.1 Implemented Sales Force Effectiveness Strategies 14
    • 4.1.2 Future Implementation of Sales Force Effectiveness Strategies 15
  • 4.2 Current Sales Models for Enhancing Sales Force Effectiveness 16
    • 4.2.1 KAM Process 16
    • 4.2.2 Types of KAM 23
    • 4.2.3 Case Studies 24
  • 4.3 Contract Sales Outsourcing 29
    • 4.3.1 Contract Sales Representatives 30
    • 4.3.2 Sales Team Recruitment and Training 30
    • 4.3.3 Sales Data Analytics and Management 30
    • 4.3.4 Shared Sales Teams and Telesales 31
    • 4.3.5 MSLs 31
    • 4.3.6 Deployment Sales Force Across Product Lifecycle 32
    • 4.3.7 The Evolving Model 34
    • 4.3.8 Case Study 35

5 Sales Force Effectiveness in Pharmaceuticals - IT Applications in Sales Models 36

  • 5.1 Customer Relationship Management (CRM) 36
  • 5.2 Sales Force Automation (SFA) 36
    • 5.2.1 Pharmaceutical CRM Vendors 36
  • 5.3 Closed Loop Marketing (CLM) Systems 37
    • 5.3.1 Benefits for Sales and Physicians 38
    • 5.3.2 Benefits for Analytics 38
    • 5.3.3 Benefits for Legal and Regulatory Departments 38
    • 5.3.4 Benefits for Marketing 38
    • 5.3.5 CLM Vendors 38
    • 5.3.6 Case Studies 39
  • 5.4 Predictive Modeling in Sales and Marketing 43
    • 5.4.1 Case Studies 45
  • 5.5 Examining Strategies 46
    • 5.5.1 Promotional Response Model 47
  • 5.6 Sales Force Effectiveness Dashboards 47

6 Sales Force Effectiveness in Pharmaceuticals - Sales Force Planning and Strategy 49

  • 6.1 Sales Force Sizing 49
    • 6.1.1 Affordability and Breakdown Method 49
    • 6.1.2 Workload Build-up Technique 49
    • 6.1.3 Competitive Benchmarking 51
    • 6.1.4 Promotion Response Modeling 52
  • 6.2 Sales Force Recruitment 53
    • 6.2.1 Introduction 53
    • 6.2.2 Sales Force Recruitment Strategy 53
    • 6.2.3 Recruitment Process Outsourcing (RPO) 55
    • 6.2.4 Case Studies 55
  • 6.3 Sales Force Training and Compensation 57
    • 6.3.1 Introduction 57
    • 6.3.2 Behavioral Coaching and the Five Step Model 57
    • 6.3.3 Specialty Care Training 60
    • 6.3.4 Continuous Assessments 61
    • 6.3.5 Incentive Management 62

7 Sales Force Effectiveness in Pharmaceuticals - Competitive Landscape 65

  • 7.1 Efficiency Analysis 65
  • 7.2 Company Profiles 67
    • 7.2.1 Teva Pharmaceutical Industries Ltd. (Teva) 67
    • 7.2.2 Bristol-Myers Squibb (BMS) 69
    • 7.2.3 Sanofi 71
    • 7.2.4 Novartis AG (Novartis) 74
    • 7.2.5 Merck & Co., Inc. (Merck) 75
    • 7.2.6 Pfizer Inc. (Pfizer) 78
    • 7.2.7 Takeda Pharmaceutical Company Limited (Takeda) 79
    • 7.2.8 GlaxoSmithKline plc (GSK) 81
    • 7.2.9 Johnson & Johnson (J&J) 84
    • 7.2.10 Eli Lilly and Company (Lilly) 85
    • 7.2.11 Abbott Laboratories (Abbott) 88
    • 7.2.12 AstraZeneca Plc (AstraZeneca) 90

8 Sales Force Effectiveness - Appendix 93

  • 8.1 Market Definitions 93
  • 8.2 Abbreviations 93
  • 8.3 Bibliography 94
  • 8.4 Research Methodology 95
    • 8.4.1 Coverage 95
    • 8.4.2 Secondary Research 95
    • 8.4.3 Primary Research 95
    • 8.4.4 Expert Panel Validation 96
  • 8.5 Contact Us 96
  • 8.6 Disclaimer 96

List of Tables

1.1 List of Tables

  • Table 1: Sales Force Effectiveness in Pharmaceuticals, Pharmaceutical and Biotech R&D Expenditure ($billion) v/s Number of NME/BLA Approvals, the US, 1995-2009 11

List of Figures

1.2 List of Figures

  • Figure 1: Sales Force Effectiveness in Pharmaceuticals, Pharmaceutical and Biotech R&D Expenditure ($bn) v/s Number of NME/BLA Approvals, The US, 1995-2009 10
  • Figure 2: Sales Force Effectiveness in Pharmaceuticals, Global, Layoffs by Pharmaceutical Companies, 2010 12
  • Figure 3: Sales Force Effectiveness in Pharmaceuticals, Global, Implemented Sales Strategies in Pharmaceutical Companies (%), 2011 14
  • Figure 4: Sales Force Effectiveness in Pharmaceuticals, Global, Sales Strategies to be Implemented in the Future (%), 2011 15
  • Figure 5: Sales Force Effectiveness in Pharmaceuticals, KAM Process, 2011 16
  • Figure 6: Sales Force Effectiveness in Pharmaceuticals, Identification and Prioritization of Key Accounts, Risk vs. Potential 17
  • Figure 7: Sales Force Effectiveness in Pharmaceuticals, Key Accounts Identification and Prioritization, Skill vs. Will 18
  • Figure 8: Sales Force Effectiveness in Pharmaceuticals, Key Accounts Primary Selection Criteria 19
  • Figure 9: Sales Force Effectiveness in Pharmaceuticals, Understanding Needs and Developing Customer Insights 20
  • Figure 10: Sales Force Effectiveness in Pharmaceuticals, Forming the Account Team 21
  • Figure 11: Sales Force Effectiveness in Pharmaceuticals, Developing Key Account Strategic Plan 21
  • Figure 12: Sales Force Effectiveness in Pharmaceuticals, Communicating and Implementing the Key Account Strategic Plan 22
  • Figure 13: Sales Force Effectiveness in Pharmaceuticals, Reviewing KAM Results 22
  • Figure 14: Sales Force Effectiveness in Pharmaceuticals, Lundbeck and the KAM Principle, 2010 24
  • Figure 15: Sales Force Effectiveness in Pharmaceuticals, Abbott's Sales Force Optimization 25
  • Figure 16: Sales Force Effectiveness in Pharmaceuticals, Abbott's Account Strategy, 2010 25
  • Figure 17: Sales Force Effectiveness in Pharmaceuticals, Abbott's Segmentation and Targeting Strategy, 2010 26
  • Figure 18: Sales Force Effectiveness in Pharmaceuticals, Calculating Account Value, 2010 27
  • Figure 19: Sales Force Effectiveness in Pharmaceuticals, Positioning the Key Accounts 28
  • Figure 20: Sales Force Effectiveness in Pharmaceuticals, CSOs, Major Services, 2010 29
  • Figure 21: Sales Force Effectiveness in Pharmaceuticals, Modern CSO Applications, Deployment of Sales Force Across Product Lifecycle, 2011 32
  • Figure 22: Sales Force Effectiveness in Pharmaceuticals, CSOs and Evolving Sales Model 34
  • Figure 23: Sales Force Effectiveness in Pharmaceuticals, CLM-enabled Commercial Organization 37
  • Figure 24: Sales Force Effectiveness in Pharmaceuticals, Wyeth's Target Selection Model, 2010 39
  • Figure 25: Sales Force Effectiveness in Pharmaceuticals, Wyeth's Segmentation Model, 2010 40
  • Figure 26: Sales Force Effectiveness in Pharmaceuticals, Benefits of CLM for Wyeth, 2010 40
  • Figure 27: Sales Force Effectiveness in Pharmaceuticals, Customer Response Framework for CLM, Wyeth, 2010 41
  • Figure 28: Sales Force Effectiveness in Pharmaceuticals, Customer Response Success Rate for CLM, Wyeth, 2010 41
  • Figure 29: Sales Force Effectiveness in Pharmaceuticals, Wyeth and its CLM Process, 2010 42
  • Figure 30: Sales Force Effectiveness in Pharmaceuticals, Predictive Modeling Data Integration 44
  • Figure 31: Sales Force Effectiveness in Pharmaceuticals, Predictive Modeling 44
  • Figure 32: Sales Force Effectiveness in Pharmaceuticals, Predictive Modeling Process 45
  • Figure 33: Sales Force Effectiveness in Pharmaceuticals, Sales Index vs. Sales Strategy 46
  • Figure 34: Sales Force Effectiveness in Pharmaceuticals, Promotional Response Model on Sales 47
  • Figure 35: Sales Force Effectiveness in Pharmaceuticals, Workload Build-up Model Case Study, 2011 50
  • Figure 36: Sales Force Effectiveness in Pharmaceuticals, Competitive Benchmarking Model Case Study, 2011 51
  • Figure 37: Sales Force Effectiveness in Pharmaceuticals, Promotion Response Model, 2011 52
  • Figure 38: Sales Force Effectiveness in Pharmaceuticals, Optimal Promotion Response Model, 2011 53
  • Figure 39: Sales Force Effectiveness in Pharmaceuticals, Advantages of RPO, 2011 55
  • Figure 40: Sales Force Effectiveness in Pharmaceuticals, Sales Force Strategy, Incentive Compensation Functionality, Global, 2010 63
  • Figure 41: Sales Force Effectiveness in Pharmaceuticals, Sales Force Strategy, Oracle Incentive Compensation Solution, 2010 64
  • Figure 42: Sales Force Effectiveness in Pharmaceuticals, Efficiency Analysis, 2011 65
  • Figure 43: Sales Force Effectiveness in Pharmaceuticals, Efficiency Analysis, 2010 66
  • Figure 44: Sales Force Effectiveness in Pharmaceuticals, Efficiency Analysis, 2009 66
  • Figure 45: Teva Pharmaceutical Industries, Global, SG&A Expenses (%), 2011 68
  • Figure 46: Teva Pharmaceutical Industries, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 69
  • Figure 47: Bristol-Myers Squibb, Global, SG&A Expenses (%), 2011 70
  • Figure 48: Bristol-Myers Squibb, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 71
  • Figure 49: Sanofi, Global, SG&A Expenses (%), 2011 72
  • Figure 50: Sanofi, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 73
  • Figure 51: Novartis, Global,, SG&A Expenses (%), 2011 74
  • Figure 52: Novartis, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 75
  • Figure 53: Merck, Global, SG&A Expenses (%), 2011 76
  • Figure 54: Merck, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 77
  • Figure 55: Pfizer, Global, SG&A Expenses (%), 2011 78
  • Figure 56: Pfizer, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 79
  • Figure 57: Takeda Pharmaceutical Company, Global, SG&A Expenses (%), 2011 80
  • Figure 58: Takeda Pharmaceutical Company, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 81
  • Figure 59: GlaxoSmithKline, Global, SG&A Expenses (%), 2011 82
  • Figure 60: GlaxoSmithKline, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 83
  • Figure 61: Johnson & Johnson, Global, SG&A Expenses (%), 2011 84
  • Figure 62: Johnson & Johnson, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 85
  • Figure 63: Eli Lilly, Global, SG&A Expenses (%), 2011 86
  • Figure 64: Eli Lilly, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 87
  • Figure 65: Abbott, Global, SG&A Expenses (%), 2011 88
  • Figure 66: Abbott, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 89
  • Figure 67: AstraZeneca, Global, SG&A Expenses (%), 2011 91
  • Figure 68: AstraZeneca, Global, SG&A Expenses by Year ($m) and Growth Rate (%), 2009-2011 92
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